Children are more likely to know about cryptocurrency than their parents are, according to T. Rowe Price’s latest Parents, Kids & Money Survey, which drew responses from over 2,000 parents and their children, ages eight to 14.
57% of children are familiar with cryptocurrency in contrast with just 47% of parents, with older children, ages 11 to 14, and boys being more likely to be familiar with the currency. Even among parents familiar with cryptocurrency, a portion — 32% — say their children trade in cryptocurrencies or digital assets more than they, the parents, do.
Roger Young, thought leadership director at T. Rowe Price, said the survey showed both potential positives and negatives of kids’ interest in cryptocurrencies. Their interest has led them to have more conversations about finances with their parents; 42% of parents report having regular conversations about finances with their kids because of cryptocurrency, and 37% say their children are more financially savvy due to their knowledge of cryptocurrency.
“When parents give kids more freedom to spend their money, to make choices about what they do with their money, that helps to foster better prepared kids,” he said. “So, you could make the argument that a kid who has read about crypto and maybe even invests a small amount, that that’s a good learning experience with them.”
However, he added, there is some concern that parents are not being as diligent as they could be in informing their children about the risks associated with investing in cryptocurrency.
“Only around half of the parents who were familiar with cryptocurrency say that they are talking with their kids about the risk,” he said. “These are very speculative and volatile investments and the parents, I think, have a role to talk not just about the opportunity but to talk about risk.”
Parents themselves vary in how wary they are of cryptocurrency. Of the 28% of parents who have money invested in cryptocurrency, just over half, 53%, worry that the currency is a bubble that is going to eventually burst and only 52% consider it a “fad” that will soon fizzle out.
Still, despite concerns, cryptocurrency has skyrocketed to become the second-most common investment type for parents, following only mutual funds, in which 29% of parents invest in.
Children’s awareness of cryptocurrency outpaces their awareness of other investment types. Whereas 57% of children know about cryptocurrency, 49% know about traditional stocks, 40% know about investing apps, 34% know about meme stocks (a term that emerged in recent years to refer to stocks that become popular through social media), and 31% know about non-fungible tokens, also known as NFTs.
Kids are also learning about investing, including in cryptocurrencies, in new places. While the majority of kids — 83% of those ages eight to 10 and 70% of those ages 11 to 14 — consider their parents to be among their most trusted source of information about investing, 40% of kids in the older age bracket turn to social media sources like YouTube and Facebook for that information.
If kids are going to continue getting financial information from social media, it’s important that parents and children are aware of where that information is coming from and whether or not it is reliable, Young said.
“It’s good to get multiple sources, and it’s good to learn in a variety of ways, but of course some of those sources are going to be reputable and some aren’t,” he said.
This is the first year that T. Rowe has included questions about cryptocurrency on its annual survey of parents’ and children’s money habits. According to Young, the firm’s researchers wanted to include cryptocurrency this year due to the increasing popularity of the digital currencies, from being featured in several Super Bowl ads this year to being promoted by celebrities like Kim Kardashian.
“We were hearing anecdotally that younger people are very much interested in it. There are a lot of famous people doing advertisements for cryptocurrencies and services, so we wanted to get a more complete sense of what people’s attitudes were,” Young said. “It’s not surprising that relative to other types of investing, kids are probably hearing more about crypto these days. But the number actually being higher than parents — that was surprising.”
Other key findings of the survey include:
- 59% of families say that their employment was negatively affected by the pandemic.
- The pandemic has caused 18% of families to turn from a two-income household to a one-income household.
- 75% of women whose employment was impacted by the pandemic say their mental health has suffered because of the change.
- More men (69%) than women (47%) whose employment was affected by the pandemic plan to return to their original job, while more woman (38%) than men (26%) will look for a new job. Additionally, more women (9.0%) than men (2.0%) do not plan to return to work at all.
- 57% of parents are at least somewhat reluctant to talk about money with their kids.
- 55% of parents say their worries about money have increased over the past year, and 75% of kids agree that their parents seem worried about money .